Question 1

What are the key legal issues in RANBAXY LABORATORIES LTD. vs THE COMMISSIONER OF INCOME TAX?

Accepted Answer

1. Whether the Tribunal erred in law in holding that CIT had validly assumed jurisdiction under Section 263 of the Act? 2. Whether the Tribunal erred in not holding that in terms of Section 92C (3) read with Section 92CA (1) of the Act, the Assessing Officer was fully competent to determine the arm’s length price of international transactions even if the aggregate value thereof exceeded Rs. 5 crores, without making reference to TPO?

Question 2

What are the facts of RANBAXY LABORATORIES LTD. vs THE COMMISSIONER OF INCOME TAX?

Accepted Answer

The appellant, Ranbaxy Laboratories Ltd., is a company engaged in the manufacture and sale of pharmaceutical products. For the relevant previous year, the company filed its return of income declaring an income of Rs. 330,64,05,014/-. The company entered into international transactions with its Associated Enterprises (AEs) in various overseas jurisdictions. The transfer pricing for these transactions was certified by M/s RSM Advisory Services Pvt. Ltd, Chartered Accountants, who issued a certificate in Form 3CEB. The Assessing Officer accepted the transfer pricing as being at arm’s length. However, the Commissioner of Income-Tax issued a notice under Section 263, alleging that the assessment was erroneous and prejudicial to the interests of the Revenue due to non-reference of the case to the Transfer Pricing Officer (TPO), taking overseas AEs as tested parties, and non-consideration of findings of an audit by the Central Excise Department. The appellant contested these grounds, arguing that the Assessing Officer had the discretion to determine the arm’s length price without referring to the TPO.

RANBAXY LABORATORIES LTD. vs THE COMMISSIONER OF INCOME TAX

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